International Markets: New York - Small is beautiful in the US
A growing economy with little pickup in inflation means a great environment for business. Smaller US companies should do relatively better than their larger brethren as the smaller companies do little export business and thus aren't hurt by the strong dollar.
"We continue to be in an ideal environment for small company stocks," said J Gary Craven, of small-stock investing at Evergreen Keystone Investments. "We have plenty of opportunities for companies to provide products and services which should be very profitable - and that leads to a strong earnings growth outlook."
Industry analysts forecast that third-quarter earnings for the companies in the S&P 500 will rise 12.2 per cent from last year.
Last week, the S&P 500 gained 0.5 per cent to a record 960.46. The Dow Jones Index rose 1.5 per cent, to 8038.58, still below its 6 August record of 8259.31.
WorldCom Inc's bid for MCI Communications prompted a round of takeover speculation in telecommunications stocks. Teleport Communications Group jumped 8 per cent, even after losing 2 points on Friday.
This week's earnings calendar includes electronics company Motorola and Aluminum Co of America, one of the 30 stocks in the Dow Jones Industrial Average, both on Monday; drugmaker Abbott Laboratories on Thursday and car manufacturer Chrysler Corp on Friday.
"We're enthusiastic about the financial stocks, particularly with interest rates coming down and the good employment report," said Thomas A Kolefas, manager at Loomis, Sayles & Co. Kolefas owns shares in Chase Manhattan, BankAmerica, Fleet Financial Group and Bank of New York.
Some investors, taking a longer view, worry that if the economy is steady, the double-digit earnings growth won't last. "If the economy does lighten up I don't see how you can expect earnings to accelerate," said Mike Hamilton, at Invista Capital Management in Des Moines, Iowa.
Mr Hamilton likes McLeod USA Inc, a local telephone company, and 3Com Corp, which makes products that link computers in networks.
Many investors caution that with the Standard & Poor's 500 Index up 30 per cent this year, stocks already reflect the glowing outlook, so prices may not rise much further from here. Still, with inflation benign and interest rates falling, neither are stocks likely to tumble any time soon.
Copyright: IOS & Bloomberg
- 1 Woman accidentally shoots herself in the head while posing for a selfie
- 2 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
- 3 Puerto Rico, island of lost dreams: People are leaving the debt-hit territory in droves as near neighbour Cuba's star rises
- 4 Female Muay Thai champion hustles coaches to give them a beating
- 5 16-year-old girl beaten and burned alive by lynch mob in Rio Bravo, Guatemala
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...